Is a VA cash-out refinance or a HELOC better for a veteran?

A real example from my desk

I recently worked with a veteran in Phoenix–Scottsdale, Arizona who wanted to consolidate debt and take approximately $40,000 cash out for a roof. He came in asking about a HELOC.

After comparing options, we found a VA cash-out refinance was the better fit for his situation. The new payment was roughly $461 less per month than the combination of his previous mortgage plus debt. Every situation is different — but this is why it pays to compare both paths before choosing.

What makes VA cash-out different

• Backed by the U.S. Department of Veterans Affairs, with eligibility requirements that apply.
• Replaces your existing mortgage with a new VA-guaranteed loan, potentially at a different rate.
• Can be used to take equity out for debt consolidation, home improvements or other eligible purposes.
• May allow higher loan-to-value ratios than some conventional equity options, subject to program guidelines.

When a HELOC may make more sense

If your current mortgage rate is lower than today's rates, replacing the whole mortgage could raise the rate on the entire balance. A HELOC leaves your first mortgage untouched and lets you borrow against the difference. We'll run both scenarios with your actual numbers before you decide.